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Which governor to blame for the largest tax hikes in CT history?

October 1, 2018

Quick quiz: Which governor approved the two largest tax hikes in modern Connecticut history?

If you answered Dannel P. Malloy you would be in elite company. The claim about the Democratic governor has become a mantra for Republican gubernatorial nominee Bob Stefanowski, GOP lawmakers, and conservative policy groups.

You also would be wrong — by any measure.

Malloy certainly shares responsibility for one of the largest increases, namely the $1.8 billion package he signed in 2011. He then got tagged with the second largest tax increase when, four years later, he signed increases worth between $670 million and $895 million.

But even the higher number is well below the mammoth-sized tax increase Gov. Lowell P. Weicker Jr. signed 27 years ago — which was worth $1.1 billion before adjusting for inflation and which prompted thousands of angry protesters to gather on the Capitol lawn.

“With respect to this perennial Republican talking point, the facts prove it to be an outright lie, and something that simple fact-checking can refute,” Malloy spokeswoman Kelly Donnelly said.

But Republican political strategist Liz Kurantowicz argued the GOP’s argument isn’t tainted, even if the tax claim is exaggerated.

“He stood up in front of taxpayers and said I’m going to take a pledge not to raise taxes, and then he did,” Kurantowicz said. “He said we were not going to have deficits when he knew full well we were going to.”

Pledging not to raise taxes and then doing so, however, isn’t the same as pushing through the two largest tax increases in modern state history.

And while Malloy is undoubtedly guilty of the former, the CT Mirror’s analysis shows that he isn’t responsible for the latter.

That analysis looked at projections from the legislature’s nonpartisan Office of Fiscal Analysis for the first fiscal year after the enactment of tax increases. It also counted any policy change that increased taxpayers’ obligations and their projected annual impact.

Many Democratic lawmakers argued the 2015 tax hikes weren’t as severe as Republicans’ depicted because only about $670 million of the increases affected existing tax rates. Another $225 million involved canceling or deferring tax cuts that — while approved — hadn’t taken effect yet. Republicans disagreed.

These were counted in this analysis.

The first test was a simple comparison of nominal dollars. This test has severe limitations, since it doesn’t adjust for inflation, and dramatically understates the value of the older tax hikes.

In other words, $1 taken from taxpayers in 1989 could have purchased more than $1 taken today.

Under the first test, Malloy still doesn’t hold the top two, but his 2011 and 2015 increases rank first and third, respectively.

The second test, which many economists use, adjusts for inflation.

Using that method, a clear separation occurs. The tax hikes approved by Weicker and O’Neill, as well as Malloy’s first, are far more significant than the other three. Malloy’s 2015 increase falls to fifth.

The last method is similar to an inflationary adjustment, but also recognizes that some government costs — such as contractually mandated payments on bonded debt and retirement benefits — often grow faster than the rate of inflation.

The CT Mirror looked at these tax increases and what portion they supported in their respective budgets. Using this approach, Weicker’s and O’Neill’s increases covered the largest shares of their respective budgets.

And Malloy? His 2011 tax hike ranks third, while the 2015 increase falls to sixth-largest.

Stefanowski, whose campaign has centered on comparing Democratic gubernatorial nominee Ned Lamont with Malloy, has repeatedly accused the outgoing governor of orchestrating the two-largest tax hikes in state history. Most recently, Stefanowski made that claim during the Sept. 26 gubernatorial debate televised on WFSB-TV 3.

When presented with the CT Mirror’s analysis, the Stefanowski campaign initially released a one-sentence, written statement early Sunday.

It read: “While Lowell Weicker did sign a bill creating Connecticut’s state income tax in 1991, Dan Malloy has signed into law the two largest increases of the state income tax.”

But that isn’t accurate either.

The tax package Gov. John G. Rowland signed into law in 2003 was projected to raise $516.8 million in income taxes, according to the legislature’s nonpartisan Office of Fiscal Analysis.

The 2009 tax hike enacted under Gov. M. Jodi Rell cost income taxpayers $617.9 million.

The income tax portion of Malloy’s 2015 overall tax package was projected to raise $219.3 million.

If all three increases are adjusted for inflation to 2018 dollars, or analyzed as a percentage of their respective budgets, Malloy’s 2015 hike still ranks below both. It also ranks behind Weicker’s 1991 income tax increase, by any measure.

After being presented with this information, and asked to release the sources behind their statements, the Stefanowski campaign re-stated its position for a second time on Sunday.

Campaign spokesman Kendall Marr said, “We were going off a number of press statements and press releases from (Republican) legislative leadership at the time that we called (Malloy’s 2011 and 2015 tax hikes) the two largest tax increases in state history. That was our sourcing history for that talking point.”

Marr then added, “I can concede that they should be referred to as two of the largest tax increases instead of the two largest.”

“Bob Stefanowski has no clue about Connecticut, and he is selling a bundle of lies that would make Donald Trump blush,” Lamont campaign manager Marc Bradley wrote in a statement. Lamont has not accused Malloy of approving the two largest tax increases in state history.

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